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Society supports plan to pay off unemployment debt

Written on Apr 9, 2021

The Ohio Society of CPAs this week voiced support for a proposal by Gov. Mike DeWine to use money from the federal American Rescue Plan to pay off Ohio’s pandemic-caused unemployment compensation loan – now at $1.46 billion and growing.

Gov. DeWine on Thursday said doing so “will free Ohio employers from this burden” and enable them to focus on returning employees to work. It will help small businesses in particular and is a “very important step” to stabilize conditions and “spur long-term growth.”

Ohio Society of CPAs President & CEO Scott Wiley, CAE, said the plan is an important step for businesses’ recovery.

“OSCPA strongly supports the DeWine Administration’s proposal to use newly appropriated federal COVID relief funds to pay off Ohio’s pending unemployment compensation debt of $1.4 billion and counting,” Wiley said. “Using this one-time federal money to pay off this significant pandemic-related loan is a very smart move and will result in saving struggling Ohio businesses from paying hundreds of millions in federal interest and penalties over the next few years.”

States are given a two-year grace period to repay the UC loans, then businesses are saddled with penalties on their SUTA that increase by $21 per employee per year until the principal is paid off. The penalties went as high as $105 per employee during the 2008-09 recession until Ohio’s UC loan was eventually paid off after the fifth year with money that employers repaid to Ohio’s Department of Commerce Division of Unclaimed Funds.

DeWine said he discussed the “difficult job” of improving the state’s unemployment compensation fund this week with House Speaker Bob Cupp, R-Lima, and Senate President Matt Huffman, R-Lima, and that they were receptive to the idea. The governor said the problem had existed long before the pandemic and would remain after it without a legislative fix. He declined to offer specific actions he wants to see, saying he was “not prescribing anything to the General Assembly,” and that the barriers to solvency were well known.

Hannah News Service contributed to this report.